Mortgage securities: They aren't all lemons

Investors in mortgage securities swung from irrational exuberance to equally irrational pessism. Not long ago, they seemed to have concluded that just about every house in America was going to be foreclosed on. Now some rationality is returning. People are realizing that there is some real value in some of the private-label residential mortgage-backed securities that were issued during the go-go years, 2004-2007. Notice I said “some,” not all. There are plenty of losses left to be felt in the housing market. I wrote about investors’ efforts to pick out the sweet fruit from the lemons in a news story. Let me know what you think.

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